The Federal Government is working with relevant agencies to remove the controversial value added tax (VAT) from locally produced liquefied petroleum gas (LPG), commonly called cooking gas.
There has been effort from operators in the LPG subsector of the oil and gas industry to persuade the government to remove VAT from locally produced LPG. This is because imported LPG doesn’t attract VAT making it cheaper than its local counterpart.
The Federal Government has given assurance to resolve the VAT issue. The Executive Director, Commercials, Products and Pipeline Marketing Company (PPMC), an arm of the Nigerian National Petroleum Corporation (NNPC), Sir Billy Okoye, who spoke on the sideline of the annual general meeting (AGM) of Nigerian Association of LPG Marketers (NALPGAM) in Lagos, said: “A lot of work is being done to address the issue of VAT on locally produced LPG as against imported ones. The Federal Inland Revenue Service (FIRS), NNPC, NLNG, Nigeria Liquefied Petroleum Gas Association (NLPGA) and NALPGAM are working together and very soon, official announcement will be made on VAT removal.
“The NNPC is supportive of the initiative of NALPGAM in deepening LPG consumption by distributing free gas cylinders to very low income earners and in rural areas.
“The Corporation wants LPG consumption to get to all the nooks and crannies of the country. The refineries are producing LPG today and our intention is ensure that enough LPG is supplied to the country. Thanks to NLNG for what it is doing.
“NLNG in collaboration with the NNPC is supplying a lot of LPG to the country and we intend to continue doing that. .”
President of NALPGAM, Nosa Ogieva-Okunbor, said removal of VAT on locally produced LPG will make the commodity cheaper and boost the consumption of cooking gas in Nigeria. He said NALPGAM distributed about 500 cylinders free of charge at Sheraton Lagos inaugural free cylinder initiative and plans to do more.
He said: “It is imperative to develop effective policies to encourage investors to come into the LPG subsector to deepen market penetration, boost the country’s economy and protect the environment.”
He commended the government for setting up a committee to look at the issue of VAT on locally produced LPG which he said has made the product out of the reach of many consumers.
The LPG produced in the country and supplied to local market for internal consumption is done by the Nigeria Liquefied Natural Gas Limited (NLNG). Unfortunately, at the establishment of the NLNG, the supply of LPG to the local market was not in the plan. The entire LNG and LPG produced by the company was meant for export.